Individual epidemiologic studies as well as the pooled analysis of observational studies have indicated the association between type 2 diabetes (T2D) and hepatitis C virus infection (HCV). Whether HCV infection is the cause of diabetes or diabetic patients are more prone to get HCV infection is still in question. The objective of the present review was to provide answers to this issue, based on available evidence from epidemiologic, molecular, experimental and therapeutic studies. Our current understanding of how chronic HCV infection could induce T2D is incomplete, but it seems twofold based on both direct and indirect roles of the virus. HCV may directly induce insulin resistance (IR) through its proteins. HCV core protein was shown to stimulate suppressor of cytokine signaling, resulting in ubiquitination and degradation of tyrosine kinase phosphorylated insulin receptor substrates (IRS1/2) in proteasomes. HCV-nonstructural protein could increase protein phosphatase 2A which has been shown to inactivate the key enzyme Akt by dephosphorylating it. Insulin signaling defects in hepatic IRS-1 tyrosine phosphorylation and PI3-kinase association/activation may contribute to IR, which leads to the development of T2D in patients with HCV infection. The peroxisome proliferator-activated receptors (PPARs) are also implicated. PPARα/γ, together with their obligate partner RXR, are the main nuclear receptors expressed in the liver. PPARα upregulates glycerol-3-phosphate dehydrogenase, glycerol kinase, and glycerol transport proteins, which allows for glucose synthesis during fasting states. Decreased activity of PPARs could attribute to HCV-induced IR. Immune-mediated mechanisms may be involved in the indirect role of HCV in inducing IR. It is speculated that TNF-alpha plays a major role in the pathogenesis of IR through lowering IRS1/2. Furthermore, HCV infection- triggered ER stress could lead to the activation of PP2A, which inhibits both Akt and the AMP-activated kinase, the regulators of gluconeogenesis. In summary, we illustrate that HCV infection is accompanied by multiple defects in the upstream insulin signaling pathway in the liver that may contribute to the observed prevalence of IR and diabetes. Future studies are needed to resolve this issue.